Dividend stripping anti-avoidance rules restrict capital loss claims when exempt income is received around the record date.

Anti-tax avoidance rules on dividend and income stripping deny a tax benefit where securities or units are acquired shortly before the record date, exempt dividend or income is received, and the asset is sold shortly after the record date at a lower price. The loss from the purchase and sale is ignored only to the extent of the exempt dividend or exempt income, so that the deductible loss is restricted to the lower of the capital loss and the exempt amount. The Assessing Officer may also require information relating to securities on at least twenty-eight days' notice.

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